Friday, August 29, 2008

Sagicor strong but Jamaica worried by inflation

Sagicor Financial Corporation, strengthened by its Jamaican subsidiaries, has recorded a solid half-year performance in which its net profit climbed 25 per cent at the end of June 2008.

For the six month period, the Barbados-based insurance conglomerate, garnered net income of US$45.4 million, or earnings per share of US$12, compared with the prior year's US$36.2 million or US$9.50 per share.

Sagicor's revenue also shot up 48 per cent to US$461.7 million, while net investment and other income amounted to US$171.3 million, moving from US$145.8 million in the corresponding six-month period of 2007.

The Barbados conglomerate has declared dividends of US 3 cents per share, payable October 15, which converted to Jamaican currency amounts to $599.5 million based on the more than 277.5 million shares listed on the exchange.

J$1.5b profit

Sagicor Life Jamaica, its top performing subsidiary, reported a net profit, attributable to stockholders, of J$1.5 billion or 40 cents per share, up 22 per cent.

Within the second quarter the life insurance giant recorded a profit of $729 million, up 17 per cent compared with the second quarter in 2007.

The Jamaican operation in the last quarter struck a deal with Blue Cross of Jamaica to acquire its health insurance portfolio. The acquisition is subject to regulatory approval.

Increased ownership

Sagicor Jamaica, which is led by Patrick Byles, attributes its performance for the period under review to higher interest rates, lower reinsurance cost and amortisation charges as well as a larger share of earnings from Sagicor Cayman, having increased its ownership from 51 per cent to 75.2 per cent.

Consolidated revenues for the half year amounted to $9.2 billion with investment income up by 11 per cent to $2.3 billion.

During the six-month period, Sagicor Jamaica's administrative expenses grew to $2.2 billion, an increase of 18 per cent over the prior year's $1.88 billion.

The company fears its operating expenses could grow even more with inflation still on an upward trajectory.

Partially reflected in the current numbers were higher spending by investment subsidiary, Pan Caribbean Financial Services (PCFS), relating to the set-up of its commercial bank.

The brokerage in June gave up its merchant banking licence and launched into commercial banking under the name PanCaribbeanBank.

In the periods ahead, Sagicor Jamaica says it expects rising inflation - already at 14.7 per cent year to date - to affect its cost of operations.

Pursue opportunities

"During the second half-year we will be implementing initiatives to raise our operating efficiencies even as we pursue opportunities for business growth," said chairman Dodridge Miller and president Byles in the statement to the accounts.

For the second quarter, Pan Caribbean recorded a 32 per cent growth in profit, which totalled $351.7 million.

The company's net interest income, representing 70 per cent of gross income, grew by 19 per cent to $952 million.

Assets totalled $54.9 billion.

Pan Caribbean has declared a dividend but on its preference shares. The brokerage will pay $6.28 per share on its 6.32 million 12.5% prefs, a total of $39.7 million, on September 17.